Verizon, cable companies now “frenemies,” can sell each other’s products

The Federal Communications Commission today approved Verizon Wireless's deal to purchase lots of wireless spectrum from cable companies, while imposing limits onto a related deal in which Verizon and the cable companies will resell each other's services.

Verizon will purchase spectrum in the Advanced Wireless Services band from Comcast, Time Warner Cable, and Bright House Networks, while selling some of its leftover spectrum to competitors T-Mobile and Leap Wireless. As part of the whole series of agreements, Verizon will resell its competitors' cable products, and the cable companies can resell Verizon Wireless services.

The FCC unanimously approved the agreement, but with some reservations. The commercial agreement to resell services "on their face, would have turned former fierce competitors not only into 'frenemies', but collaborators, for as long as these companies found it to be in their mutual financial interests," FCC Commission Mignon Clyburn wrote in a statement. "As initially proposed, no FCC could have found the transaction to be in the public interest."

Because of those concerns, the FCC's approval forbids Verizon from reselling cable products and services where Verizon FiOS service already exists, "as well as where Verizon is authorized and/or obligated to roll out this competitive service." This was the same condition already imposed upon the deal by the Department of Justice, as we wrote last week. FCC Chairman Julius Genachowski was on record supporting the approval last week, so today's final action came as no surprise.

The FCC did put one more condition on the sale: Verizon Wireless will have to allow roaming on its airwaves in nearly all of its territory for the next five years. The condition "does not simply require that Verizon Wireless offer roaming arrangements for commercial mobile data services on the AWS-1 spectrum it is acquiring in this transaction," Clyburn wrote. "It also requires Verizon Wireless to offer data roaming on any of the spectrum licenses it holds in the geographic areas where it is acquiring AWS-1 spectrum as a result of this transaction." That means the roaming requirement affects 671 out of the 716 "Cellular Market Areas" in which Verizon operates wireless services.

Public interest groups reacted to the FCC's approval, approving of the conditions imposed upon the deal but saying the commission did not go far enough to preserve competition. Freepress said it was disappointed the FCC is giving Verizon seven years to build out the spectrum it has just acquired, while the Alliance for Broadband Competition said, "the FCC’s Order does not go far enough to ensure a competitive landscape."

The Communications Workers of America union, meanwhile, argued that "the FCC’s decision allowing Big Cable to virtually monopolize wireline and video connections to millions of homes will lead to job loss and hit consumers with higher prices."